The True Value of Custom Business Insurance Policies

I was dropping off some clothes at my local dry cleaners a couple of days ago. In the retail center, I saw a barbershop advertising haircuts for $13. That’s it. That’s all the sign said. Not Tony’s Barbershop or anything like that.

Naturally, it caught my eye — because who doesn’t appreciate a good deal? Even more, it’s kind of nice to know up front how much a service is going to cost. No uncertainty, it’s just posted right there for everyone to see.

I’m not a fan of haggling. I’d prefer to buy a car with the price set. I don’t want to sit in a dealership and negotiate for four hours questioning myself, did I get ripped off? But at the same time, price isn’t everything. What’s the value?

This got me thinking. I am often asked by clients or potential clients, “How much will an XYZ policy cost?”

Since business insurance is not a commodity, there’s no up front answer unfortunately.

One-Size-Fits-All Doesn’t Work for Business Insurance

A $13 haircut works because the service is relatively simple, fast, and repeatable. One head of hair is pretty comparable to the next. I know that’s a generalization, but you get what I mean. No matter who walks in, they get the same base offering.

Business Insurance doesn’t work that way.

Let’s put this in the perspective of Professional Liability insurance (Errors & Omissions).

Your business has unique exposures. The way you interact with clients impacts your risk profile. How you structure your contracts is crucial. The way you manage your operations also plays a role. Additionally, how you handle mistakes or disputes affects your risk profile.

Before a policy can even be priced, an underwriter needs to understand:

• What services your business provides
• What your client engagements look like
• Whether you use formal written contracts
• How you handle complaints or errors
• If you’ve had claims in the past

You don’t just pick a price off a menu. You submit an application, answer questions, and let the underwriter assess the actual risk.

“Just Give Me a Quick Quote” Doesn’t Cut It

It’s tempting to want a quick quote. Many websites offer instant insurance at seemingly bargain prices.

But when it comes to Professional Liability (E&O) insurance, you don’t want cookie-cutter coverage. You want a policy that actually responds to the types of claims your business face.

In my work with professional service firms — law practices, marketing agencies, consultants, managed service providers, etc. — I’ve seen too many “cheap” policies fail. They fail at the worst time. This happens because no one took the time to do it right.

The Bottom Line

For some things in life, it’s nice to know up front what something’s going to cost you. A car, a haircut, a 12-pack of beer….fine. But business insurance isn’t a commodity.

With business insurance, you’re not just buying a policy. You’re buying peace of mind that your business is protected when something goes wrong.

Ask questions. Work with someone who understands your industry. And don’t settle for a haircut when what you really need is a custom-fit suit.

Need help reviewing your liability insurance coverage?
Let’s have a real conversation about your business — not just your budget.

-JK